Thanks!

Charles and Chris

The recent swine flu (er, H1N1 virus) outbreak has reminded me a lot of our economy here over the last few days.  Is there a real problem?  Yes.  If you catch the swine flu, could it be serious?  Yes.  Is the size of the swine flu anywhere near the pandemic the media is making it out to be?  I’d have to say “no” to that one. 

It has amazed me the power of the media when it comes to spreading fear and causing us to want to go right back to the media for more “valuable information”.  I have a brother- and sister-in-law who live on a remote Young Life camp in the desert of Oregon.  To put it in perspective, the driveway is 13 miles long and the nearest grocery store is an hour away.  My wife Amy was talking to them about the swine flu outbreak, and they had mentioned that they were asking other folks at camp about the disease, only to get the reply of “What’s the swine flu?”. 

How can you not know about the swine flu!!?  It’s everywhere – sending stocks spiraling, shutting down school systems, closing countries’ borders, changing the world as we know it (okay, I’m getting carried away here…).  So far there have been 10 deaths worldwide, 1 in the US.  But on average, there are 35,000 deaths per year in the US from the normal flu.  Why isn’t the media pumping that information?  Because it doesn’t sell.  Just the name “swine flu” makes me picture a raging pig with bloodshot eyes, foaming at the mouth who wants to dig its teeth into me and cackle as it infects me with the deadly disease. 

Again, I don’t think this is all to far from what’s happened in the economy.  Yes, we got ourselves in some serious trouble with the debt – credit – housing mess.  Yes, plenty of companies were way too leveraged.  But the fact that the media was able to take real statistics and turn them into blood-curtling tales did nothing but make people afraid.  And fear then turns into panic. 

I hope you don’t hear me say that both the current health situation and our world economy are just nice and rosy.  They’re not.  But the media’s goal is to play to our emotions.  Their goal is to sell press time – that’s it.  My challenge to us all is to be cautious, but not fearful.  Be cautious when around people who are hacking and sneezing right now.  Wash your hands a lot.  But don’t let that caution turn to fear over the what ifs.  Be cautious when handling God’s money.  Avoid debt when possible, spend less than you earn, invest prudently.  But don’t take your investments and sell them to invest in bullets and dogs because of “what if it’s different this time”. 

The Father doesn’t want us to have fear of man, disease, or money, but only  of God alone.  The fear of the Lord is the beginning of wisdom.  Wouldn’t it be nice to have a pandemic of that?

“Imagine that you had to drive from New York City to Los Angeles. You’re in downtown Manhattan hopelessly stuck in traffic. Bicycle messengers are whizzing past. You jump out of your car, sell your car on the spot (at a ridiculously low price), buy a bicycle, and continue your trip to the West Coast. As absurd as this scenario sounds, investors do it everyday when they make short-term decisions for long-term journeys. Stick with a vehicle that will take you to the end of the road.” – Don Connelly

It looks like there’s a lot of this phenomenon going on these days.  We all want to buy low and sell high, but it can be increasingly difficult to stay true to our beliefs when it looks like the sky is falling.  We all want to have our investments do well, and the problem is that there’s always someone who has done better than us at investing (as well as someone who’s done worse, assuming you didn’t give any money to Madoff).  My good friend Bart always reminded me that “comparison is the thief of joy”.  Whatever you are holding in  your investment accounts, it is easy to find another investment that is doing better, or whizzing past you in a bicycle to use the analogy. 

The challenge is to keep your eyes not on what that hottest stock or fund is doing, but on simply managing God’s resources in a way that is integritable, smart, and pleasing to the Owner.  That might mean highering a professional advisor, or doing a little research yourself, figuring out what you believe to be true about investing, and then sticking to your guns even when everyone else is declaring that the sky is falling.  It is certainly not a job for the lighthearted. 

We don’t know when the Master will be returning; it might be tomorrow or 2,000 years from now.  So while we don’t know when the end of our Stewardship Journey will be, all we can do is focus on being faithful, and not getting distracted with comparison.

I’ll (Charles) admit that while I’m a financial planner full-time, I’m not always the most sophisticated, saavy individual when it comes to finances.  I’m more of a meat and potatoes guy, who believes in the basic principles of spend less than you earn, give generously, and avoid debt.  Stewardship doesn’t have to be complicated if we can do the simple things well. 

But I’m going to go ahead and expose my first daring move in quite some time.  I was trying to explore a way to refinance my mortgage since rates are at all-time lows right now.  I talked with a mortgage broker I knew (FYI, if you are considering refinancing, talk to one of these guys because they aren’t tied to just one lender and usually can get you a great deal), and he informed me that sadly, even though my current rate is 6.125%, there wasn’t much he could do to get me a low-to-no cost refi right now because “I’ve paid down my morgage too much”.   A great problem to have, as we only owe about 40% of the appraised value of our home, but a problem nonetheless.

Then, some form of inspiration hit.  I saw that on Bankrate there were Home Equity Lines of Credit with rates as low as 2.99% APR right now.  So I started checking into getting an H.E.L.O.C. for my current mortgage balance and paying off the entire balance, leaving me with the same balance, only on a HELOC with a rate of 3%. 

I was talking this strategy over with Chris, and he told me to check out a local credit union, because apparently they can offer even better rates sometimes.  Well, I did, and it looks like they are going to issue me a HELOC with a rate of 2.0%!  That is insane!  Before you stop reading this to go call your credit union, please keep reading as this is not for everyone. 

It only works for us because we owe a small amount compared to the total appraised value, and because more than likely we’ll be selling our home at some point within the next year or two, at which point we’ll pay back the HELOC and get a fixed mortgage on our new home.  You see, a HELOC has a variable rate, which is tied to the Prime Rate (currently 3.25%).  As the economy improves, Prime will go up, as will our mortgage (HELOC) rate.  But since we’ll be moving relatively soon, the downside risks are pretty negligible as we’ll be in this economic recovery for quite a while. 

So thanks, Family Trust Credit Union.  You are going to save me about $220 each month in interest payments (don’t worry, I’ll keep paying the same amount towards my mortgage and just pay down more principal).  That means that after 1 year, I will have paid down about $2,700 in additional principal, while making no extra payments!

What’s the lesson here?  That the meat and potatoes are what’s most important to your long-term picture.  That if you don’t practice the main principles of stewardship, then none of the fancy techniques matter.  But if you can take care of the basics first, then there are many tools and techniques out there than can help you enhance your overall financial position.

I agree that the events that got us to the situation we are in today are different in some ways than past events. However at the same time as we look back over history we have been through “similar” events in historys past.

These cylces are always the same in that they are always different. One thing that we know is certain about the economy is that it is always uncertain. What do we do during these events, that will inevitably happen again?  Here are 5 things you can do.

1. Understand that God truly owns it all…He can do and take and give as he desires. Psalm 24:1, Haggai 2:8

2. Avoid the excessive use of debt…Debt has become a “normal” way to live. It violates some of God’s principles and makes us become slaves to the lender. Proverbs 22:7

3. To help with #2, Do not live a consumptive, extravagant, “stuff” driven lifestyle, be content with what you have. Luke 12:15, 1Timothy 6:6-13.

4. Do not live a greedy life, however having something saved up for the events of life is a wise thing to do. Proverbs 6:6-8

5. Give! Give! Give! This is the greatest way to show are faithfullness to the Lord and our trust in Him. Acts 20:35, Proverbs 3:9-10, Malachi 3:10, 2Corinthians 8:1-5.

May you have a great weekend!

At the end of the talk there was time for Q & A and there were two questions that I thought were worth posting about.

Question: If I am about to lose my job, should I continue to Tithe or should I save what I would have tithed to make it through the next few months as I look for a job?

Answer: This question was tough to answer for a moment as I felt compassion towards this man who knew he was going to soon lose his family’s sole source of income. What I told this man was that God’s word calls us to give back to Him, not because he needs it, but because He wants all of us. He wants our hearts to be in right relationship with Him and by giving back we acknowledge his ownership of everything that we have and everything that we will soon lose. I referenced Proverbs 3:9 , Malachi 3:8-10, Mark 12:42, 2Corinthians 8:1-5 and Matthew 6:33. I told him that I personally would continue to tithe because I believe that as long as the Lord has given me the opportunity to make money then I must acknowledge his ownership of all things and give back the first fruits to Him.

Question: I draw unemployment, should I be tithing on that money?

I stumbled a little bit thinking about a response for this question. I think in my heart I would tithe on this because it is a source of income. In Proverbs 3:9 there is no indication of seperating earned income from income received other ways. Ultimately tithing and giving is a way of  acknowledging God’s ownership in all things and we are being blessed to receive unemployment income, therefore by giving back the first fruits of this, we are trusting the Lord to be our ultimate provider.

For a good article on the second question you can check out this article from Crown financial: http://www.crown.org/LIBRARY/ViewArticle.aspx?ArticleId=571

            In 1952, young Florence Chadwick stepped into the waters of the Pacific Ocean off Catalina Island, determined to swim to the shore of mainland California. She’d already been the first woman to swim the English Channel both ways. The weather was foggy and chilly; she could hardly see the boats accompanying her. Still, she swam for fifteen hours. When she begged to be taken out of the water along the way, her mother, in a boat alongside, told her she was close and that she could make it. Finally, physically and emotionally exhausted, she stopped swimming and was pulled out. It wasn’t until she was on the boat that she discovered the shore was less than half a mile away. At a news conference the next day she said, “All I could see was the fog…I think if I could have seen the shore, I would have made it.”[1]

These days we have a lot of fog around us. The difficult and uncertain economic environment can keep us from being able to focus and to persevere with endurance.

Throughout the Bible we observe over and over again that trials and the moments when we have to endure are often the most rewarding and character building.

James tells us this in chapter 1:2-4 “Consider it all joy, my brethren, when you encounter various trials, knowing that the testing of your faith produces endurance. And let endurance have its perfect result, so that you may be perfect and complete, lacking in nothing.” 

Paul tells us in Romans 5:3-4: “…we rejoice in our sufferings, knowing that suffering produces endurance, and endurance produces character, and character produces hope.” 

From these verses we see that: we have hope so that we can face trials, we experience trials so that we can have endurance and we can endure because we have hope.  Sometimes as we go through the trials of life we easily become like Florence Chadwick, fatigued, fearful and hopeless.  

Here are six things that you can do to ENDURE through the fog and not lose hope:

 1.      Embrace what is true by reading God’s word (Joshua 1:8-9)

2.      Never lose focus of what you put your hope in (Matthew 14:30)

3.      Don’t stop giving (2 Corinthians 8:1-5)

4.      Understand what is most important to you (Matthew 6:21)

5.      Realize tomorrow will be a new day (Lamentations 3:22-23) 

6.      Encourage others (Hebrews 10:24)

 As you go through the trials and fog of life may you have hope to endure!

Obama’s new “Making Work Pay” plan has been officially enacted, and you should have noticed a nice little bump in your takehome pay over the last several paychecks (assuming you’re not making a boatload of money already; it gets phased out). 

The tax credit is essentially a $800 tax break for married couples ($400 for single or separate filers) that is another attempt to “stimulate the economy” (sidenote: Chris has recently discovered Pepsi Max, which has 0 calories but twice the caffeine of normal Pepsi;  is there a way to just feed that to the economy?).  The nice part is that your witholdings should have been automatically adjusted to take this credit into account.  In essense, you’ve got more money coming in each paycheck. 

My challenge to you is: what are you going to do about it?  You could spend it on a cable tv upgrade, enjoy a few meals out each month, let it sit in checking, invest it, etc.  There’s no “right answer”, but you should probably take a few minutes and figure out what the best use of this money will be for you.  Maybe consider applying towards a credit card or auto loan debt. 

Just don’t do nothing, which is what the “wicked, lazy” servant was chastised for.   Enjoy the extra cash!!

But godliness with contentment is great gain.  For we brought nothing into this world, and we can take nothing out of it.  But if we have food and clothing, we will be content with that -  1Tim 6:6-8.   Let’s hope so.

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Jesus looked at him and said, “How hard it is for the rich to enter the kingdom of God! Indeed, it is easier for a camel to go through the eye of a needle than for a rich man to enter the kingdom of God.” Those who heard this asked, “Who then can be saved?” Jesus replied, “What is impossible with men is possible with God.”  Luke 18:24-27

Is this hyperbole?  Sarcasm?  Obviously you can’t squeeze a 1,500 pound sweaty animal through a hole designed for thread.  Were there some miniature camels ala sea monkeys back then?  What’s the catch?

I’ve heard it said that the “Eye of the Needle” refers to a gate that men could go through but that a camel would have to kneel down to squeeze through in a difficult manner.   This sounds plausible enough until you do the research and discover that there is no such gate ever mentioned anywhere – it was made up to try to explain the difficult passage!  Who made up such a gate?  Probably someone with a lot of money who read Jesus’ words and didn’t like what it said.  No, the truth I believe is that Jesus means just what we think he is saying.

The reason that Jesus gives this extreme analogy is that the more money and stuff we have, the tighter we will grip it.  I can’t explain why that’s the case, but seemingly without exception, the more you make and have, the harder it is to let go of it.  Jesus said in Luke 16 that you cannot serve both God and money – it is impossible (there’s that word again!).

Jesus spoke these words to the Rich Young Ruler, whom you probably remember went away very sad from his encounter with the Savior.  Unable to sell his great wealth and give it to the poor, he revealed the priorities of his heart even though he had all of his outward ducks in a row.  He revealed that his security and hope were permanently tied to his IRA account, something I think this recession is exposing in a lot of people.

Here’s the real litmus test for you: What do you feel when you hear Jesus’ words above?  Does it frighten you like it does me?  If that’s the case, then it probably serves as a warning that we are trying to hold on to things in an attempt to achieve security.  And after all, it’s impossible for such a man or woman to enter the kingdom of heaven.  The good news, of course, is that what is impossible with men is possible with God.  My stuff can never get me to heaven.  Having my act together, obeying the ten commandments like the Rich Young Ruler, can never get me to heaven.  Nothing but the blood of Jesus.  So not only do we have a hope of getting to heaven, but we can now have confidence.

Sadly, there is no Eye of the Needle gate to ease our consciences.  But there is one Gate mentioned in John 10, and “whoever enters through me will be saved”.  Rich.  Poor.  All are welcome at the Gate, and if we will submit to the Gatekeeper, then neither sin, death, or even riches can keep us from spending eternity in heaven.